EX-99.1
Exhibit 99.1
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Church & Dwight Co., Inc. |
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News Release
Contact:
Rick Dierker
VP, Corporate Finance
609-806-1900
CHURCH & DWIGHT REPORTS FIRST QUARTER 2013 RESULTS
Q1 Reported Net Sales up 12.8%, EPS up 15.2% to $0.76
Gross Margin Expanded 110 basis points to 44.9%
Record Operating Margin of 21.7%
EWING, NJ, May 2, 2013 –
Church & Dwight Co., Inc. (NYSE:CHD) today reported net income for the quarter ended March 31, 2013 of $107.7 million or $0.76 per share, compared to net income of $95.8 million or $0.66 per share for the same period in 2012. Earnings
per share increased 15.2%.
First Quarter Review
Reported net sales for the first quarter increased 12.8% to $779.3 million. Organic sales increased 2.0%, driven by 2.4% volume growth and partially offset by 0.4% unfavorable product mix and pricing. The
calculation of organic sales has been reduced by 1% due to the impact of a SAP implementation in the prior year quarter.
James R. Craigie,
Chairman and Chief Executive Officer, commented, “We are very pleased with our first quarter business results. Despite continuing weak category consumption in the U.S. and significant organic growth in the comparable period a year ago, we
delivered 2.0% organic sales growth and 15.2% EPS growth, while increasing market share on seven of our eight power brands.”
Consumer
Domestic net sales were $591.0 million, an $80.4 million or 15.7% increase over the prior year first quarter sales. First quarter organic sales increased by 1.4%, primarily due to higher sales of ARM & HAMMER liquid and unit dose
laundry detergent, OXICLEAN laundry additives, TROJAN products, and FIRST RESPONSE diagnostic kits. These increases were partially offset by lower sales of ARM & HAMMER powdered laundry detergent and KABOOM cleaners. Volume growth
contributed 1.8% to the increase in sales, partially offset by 0.4% unfavorable product mix and pricing.
Consumer International net
sales were $129.3 million, a $7.9 million or 6.5% increase over the prior year first quarter sales. First quarter organic sales increased by 5.2%, primarily due to stronger sales in the UK, Mexico, and Australia. Volume growth contributed 6.2% of
the increase in sales, partially offset by 1.0% unfavorable product mix and pricing.
Specialty Products net sales were $59.0 million, a $0.4 million or 0.7% increase over the prior year
first quarter. First quarter organic sales increased by 0.8%. Favorable product pricing contributed 1.2% to the increase in sales, partially offset by 0.4% volume decrease.
Gross margin expanded 110 basis points to 44.9% in the first quarter compared to 43.8% in the prior year first quarter. The expansion is due primarily to the positive impact of productivity
programs. Commodity costs were flat in the quarter versus the prior year first quarter.
Marketing expense was $78.9 million in the
first quarter, a $10.9 million or 16% increase over the prior year first quarter. Marketing expense as a percentage of net sales was 10.1%, a 30 basis points increase from the prior year first quarter.
Selling, general, and administrative expense (SG&A) was $101.9 million in the first quarter, a $10.1 million increase from the prior year
first quarter, primarily due to the inclusion of the Avid business. SG&A as a percentage of net sales was 13.1%, a 20 basis point decrease from the prior year first quarter primarily due to SG&A leverage on the Avid acquisition, partially
offset by an increase in research and development expenses.
Income from operations was $169.3 million in the first quarter, a $26.6
million or 18.6% increase over the prior year first quarter. Operating income as a percentage of net sales was 21.7%, a 100 basis point increase over the prior year first quarter and a quarterly record for the Company.
The effective tax rate in the first quarter was 34.0%, compared to 33.1% in the prior year first quarter. The Company expects the full year
effective tax rate to be approximately 35%.
Cash Flow
Net cash from operating activities was $72.3 million, a $41.6 million decrease over the prior year first quarter, of which $36 million related to the deferral of the December 2012 estimated federal tax
payment to January 2013 as a result of Hurricane Sandy relief. Net cash from operating activities was also impacted by increased working capital. Capital expenditures were $10.4 million, a $4.7 million decrease from the prior year first quarter.
The Company purchased $50 million or 0.9 million shares of its common stock. Cash on hand as of March 31, 2013 was $259.6 million.
New Product Activity
Mr. Craigie commented, “In the first quarter, we launched two highly innovative products: ARM & HAMMER ULTRA POWER liquid laundry
detergent and a line of TROJAN lubricants. These major launches build upon the successful fourth quarter launches of SPINBRUSH Tooth Tunes toothbrush and the ORAJEL single dose cold sore treatment. All of the innovative new products received strong
distribution support from retailers and will continue to be supported by increased marketing spending with the expectation to deliver strong organic sales growth on both our value-oriented and premium priced products.”
Futura Medical Partnership
On
April 2, 2013, the Company announced that it has signed a licensing deal with Futura Medical PLC for the manufacturing, marketing, and distribution of CSD500, a novel erection-enhancing condom. Under the terms of the agreement, the Company has
the rights to manufacture, market and distribute CSD500 in a number of key European territories and North America, subject to obtaining the required regulatory approvals.
Outlook for 2013
Mr. Craigie stated, “We continue to perform well in a difficult and challenging economic environment. Consumer spending and growth in many categories is expected to remain weak due to consumer
uncertainty. Nevertheless, we are in a strong position to continue to deliver value to our stockholders as a result of our unique portfolio of value and premium products, a strong pipeline of innovative new products, aggressive cost cutting and
tight management of overhead costs. In addition, we are excited about the Avid acquisition. The integration is on schedule and progressing well.”
With regard to 2013 targets, Mr. Craigie stated, “We continue to expect 2013 organic net sales growth to be in the 3 to 4% range. Gross margin is now expected to increase by approximately 25-50
basis points for the year, which is an improvement from our previous guidance of neutral. We plan on investing the incremental gross profit in higher media spending in support of our power brands.”
Mr. Craigie concluded, “As a result of our strong first quarter performance, we remain confident in our full year 2013 earnings per share
guidance of $2.79. This is an increase of 14% on a reported basis. With regard to the second quarter, we expect organic sales growth of approximately 3 to 4% and earnings per share of approximately $0.58, compared to last year’s second quarter
reported EPS of $0.56. These projected results reflect increased marketing spending in the second quarter behind the innovative new products that are expected to drive the continued share growth of our power brands.”
Church & Dwight Co., Inc. will host a conference call to discuss first quarter 2013 results on May 2, 2013 at 10:00 a.m. (ET). To
participate, dial 877-741-4354, access code: 35389799 (International: 706-758-7438, same access code: 35389799). A replay will be available two hours after the call at 855-859-2056 or 404-537-3406 (same access code: 35389799).
You also can participate via webcast by visiting the Investor Relations section on the Company’s website, www.churchdwight.com.
Church & Dwight Co., Inc. manufactures and markets a wide range of personal care, household and specialty products under the ARM &
HAMMER brand name and other well-known trademarks.
This release contains forward-looking statements relating to, among other things, the
effect of product mix; the impact of the Avid acquisition; earnings per share; reported net sales growth and organic sales growth; volume growth, including the effects of new products; gross margin; operating margin; marketing spending; commodity
price increases; consumer spending; cost savings programs; marketing support; effective tax rate; net cash from operating activities; capital expenditures; competition; and customer response to new products. These statements represent the
intentions, plans, expectations and beliefs of the Company, and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control and could cause actual results to differ materially from such forward-looking
statements. The uncertainties include assumptions as to market growth and consumer demand (including the effect of political and economic events on consumer demand); retailer actions in response to changes in consumer demand and the economy; raw
material and energy prices; the financial condition of major customers and suppliers; interest rate and foreign currency exchange rate fluctuations; and changes in marketing and promotional spending. With regard to the new product introductions
referred to in this release, there is particular uncertainty relating to trade, competitive and consumer reactions. Other factors that could materially affect actual results include the outcome of contingencies, including litigation, pending
regulatory proceedings; environmental matters; and the acquisition or divestiture of assets. For a description of additional factors that could cause actual results to differ materially from these forward looking statements, please see the
Company’s quarterly and annual reports filed with the SEC, including the information in Item 1A (“Risk Factors”) in the Company’s annual report on Form 10-K.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
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Three Months Ended |
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| (In millions, except per share data) |
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Mar. 31, 2013 |
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Mar. 31, 2012 |
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| Net Sales |
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$ |
779.3 |
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$ |
690.6 |
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| Cost of sales |
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429.2 |
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388.1 |
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| Gross profit |
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350.1 |
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302.5 |
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| Marketing expenses |
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78.9 |
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68.0 |
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| Selling, general and administrative expenses |
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101.9 |
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91.8 |
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| Income from Operations |
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169.3 |
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142.7 |
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| Equity in earnings of affiliates |
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0.6 |
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2.5 |
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| Other income (expense), net |
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(6.7 |
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(2.0 |
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| Income before taxes |
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163.2 |
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143.2 |
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| Income taxes |
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55.5 |
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47.4 |
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| Net Income |
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$ |
107.7 |
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$ |
95.8 |
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| Net Income per share - Basic |
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$ |
0.78 |
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$ |
0.67 |
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| Net Income per share - Diluted |
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$ |
0.76 |
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$ |
0.66 |
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| Dividend per share |
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$ |
0.28 |
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$ |
0.24 |
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| Weighted average shares outstanding - Basic |
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138.3 |
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142.3 |
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| Weighted average shares outstanding - Diluted |
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140.9 |
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144.9 |
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
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Mar. 31, 2013 |
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Dec. 31, 2012 |
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| Assets |
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| Current Assets |
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| Cash and Cash Equivalents |
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$ |
259.6 |
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$ |
343.0 |
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| Marketable Securities |
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19.7 |
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— |
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| Accounts Receivable |
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332.4 |
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303.1 |
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| Inventories |
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259.1 |
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242.2 |
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| Other Current Assets |
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41.0 |
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45.5 |
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| Total Current Assets |
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911.8 |
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933.8 |
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| Property, Plant and Equipment (Net) |
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584.5 |
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586.0 |
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| Equity Investment in Affiliates |
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24.8 |
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23.0 |
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| Tradenames and Other Intangibles |
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1,231.9 |
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1,254.9 |
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| Goodwill |
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1,223.8 |
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1,213.8 |
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| Other Long-Term Assets |
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87.7 |
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86.6 |
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| Total Assets |
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$ |
4,064.5 |
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$ |
4,098.1 |
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| Liabilities and Stockholders’ Equity |
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| Short-Term Debt |
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$ |
203.9 |
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$ |
253.8 |
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| Other Current Liabilities |
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451.7 |
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471.8 |
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| Total Current Liabilities |
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655.6 |
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725.6 |
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| Long-Term Debt |
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649.4 |
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649.4 |
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| Other Long-Term Liabilities |
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674.3 |
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662.0 |
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| Stockholders’ Equity |
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2,085.2 |
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2,061.1 |
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| Total Liabilities and Stockholders’ Equity |
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$ |
4,064.5 |
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$ |
4,098.1 |
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow (Unaudited)
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Three Months Ended |
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| (Dollars in millions) |
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Mar. 31, 2013 |
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Mar. 31, 2012 |
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| Net Income |
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$ |
107.7 |
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$ |
95.8 |
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| Depreciation and amortization |
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23.6 |
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19.2 |
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| Deferred income taxes |
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2.8 |
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1.5 |
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| Non cash compensation |
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1.7 |
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1.5 |
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| Other |
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1.8 |
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(0.6 |
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| Changes in assets and liabilities: |
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| Accounts receivable |
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(30.9 |
) |
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(4.7 |
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| Inventories |
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(14.7 |
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(11.3 |
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| Other current assets |
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(4.0 |
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(1.1 |
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| Accounts payable and accrued expenses |
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(13.4 |
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(8.1 |
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| Income taxes payable |
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2.6 |
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32.4 |
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| Excess tax benefit on stock options exercised |
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(3.5 |
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(4.2 |
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| Other liabilities |
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(1.4 |
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(6.5 |
) |
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| Net cash from operating activities |
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72.3 |
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113.9 |
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| Capital expenditures |
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(10.4 |
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(15.1 |
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| Investment in marketable securities |
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(19.7 |
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— |
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| Investment in joint venture |
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(3.2 |
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(3.0 |
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| Other |
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— |
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(0.4 |
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| Net cash (used in) investing activities |
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(33.3 |
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(18.5 |
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| Net change in short-term debt |
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(50.0 |
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(2.5 |
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| Payment of cash dividends |
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(38.6 |
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(34.2 |
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| Stock option related |
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9.3 |
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9.6 |
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| Purchase of treasury stock |
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(50.3 |
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(90.3 |
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| Lease Incentive |
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10.7 |
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— |
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| Net cash provided by (used in) financing activities |
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(118.9 |
) |
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(117.4 |
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| F/X impact on cash |
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(3.5 |
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3.0 |
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| Net change in cash and cash equivalents |
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$ |
(83.4 |
) |
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$ |
(19.0 |
) |
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2013 and 2012 Product Line Net Sales
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Three Months Ended |
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Percent |
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3/31/2013 |
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3/31/2012 |
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Change |
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| Household Products |
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$ |
358.7 |
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$ |
347.6 |
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3.2 |
% |
| Personal Care Products |
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$ |
232.3 |
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$ |
163.0 |
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42.5 |
% |
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| Consumer Domestic |
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$ |
591.0 |
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$ |
510.6 |
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15.7 |
% |
| Consumer International |
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$ |
129.3 |
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$ |
121.4 |
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6.5 |
% |
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| Total Consumer Net Sales |
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$ |
720.3 |
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$ |
632.0 |
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14.0 |
% |
| Specialty Products Division |
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$ |
59.0 |
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$ |
58.6 |
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0.7 |
% |
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| Total Net Sales |
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$ |
779.3 |
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$ |
690.6 |
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12.8 |
% |
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The following discussion addresses the non-GAAP measures used in this press release and reconciliations of non-GAAP
measures to the most directly comparable GAAP measures:
The following non-GAAP measures may not be the same as similar measures
provided by other companies due to differences in methods of calculation and items and events being excluded.
Organic Sales Growth
The press release provides information regarding organic sales growth, namely net sales growth excluding the effect of acquisitions and
foreign exchange rate changes, and the impact resulting from a timing shift in customer orders due to an SAP information systems upgrade. Management believes that the presentation of organic sales growth is useful to investors because
it enables them to assess, on a consistent basis, sales trends related to products that were marketed by the Company during the entirety of relevant periods, excluding the effect of sales timing shifts and foreign exchange rate changes that
are out of the control of, and do not reflect the performance of, management.
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Three Months Ended 3/31/2013 |
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Total
Company |
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Worldwide
Consumer |
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Consumer
Domestic |
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Consumer
International |
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Specialty
Products |
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| Reported Sales Growth |
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12.8 |
% |
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|
14.0 |
% |
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|
15.7 |
% |
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|
6.5 |
% |
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|
0.7 |
% |
| Add: |
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| FX |
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0.4 |
% |
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|
0.3 |
% |
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— |
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1.3 |
% |
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1.8 |
% |
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| Less: |
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| Acquisitions |
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|
9.9 |
% |
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10.9 |
% |
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|
12.8 |
% |
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2.6 |
% |
|
|
— |
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| Sales in Anticipation of SAP Upgrade Conversion 2012 |
|
|
1.3 |
% |
|
|
1.3 |
% |
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|
1.5 |
% |
|
|
— |
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|
1.7 |
% |
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| Organic Sales Growth |
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|
2.0 |
% |
|
|
2.1 |
% |
|
|
1.4 |
% |
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|
5.2 |
% |
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|
0.8 |
% |
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